Retiring in New Hampshire Could Save You on Taxes but Property Costs Matter
By Jim Guarino
New Hampshire offers retirees an unusual tax combination: no state tax on retirement or investment income, no general sales tax and no state estate tax. But those savings do not settle the question of whether a move makes financial sense. Property taxes, housing costs and the practical demands of daily life deserve a place in the calculation.
What retirees save on income sales and estate taxes
New Hampshire does not tax Social Security benefits, pensions, required minimum distributions or other retirement account withdrawals at the state level. It also repealed its tax on interest and dividends for tax periods beginning on or after Jan. 1, 2025. Federal income taxes may still apply to these sources of income.
The state has no general sales tax, so most everyday purchases do not carry a state sales tax. Other taxes and fees may still apply, including taxes on meals and rooms.
New Hampshire also has no state estate or inheritance tax. A large estate may still owe federal estate tax, depending on the federal exemption and the estate’s circumstances.
For retirees who want to stay in New England, those tax rules can be appealing. The size of the savings, however, depends on where a household moves from, what it owns and how it spends.
Why property taxes could change the math
Property taxes can absorb part of the savings from New Hampshire’s lack of income and general sales taxes. The relevant figure is the annual bill for a particular home, not a statewide average rate.
Local property tax rates vary by municipality. The bill reflects the home’s assessed value and rates associated with municipal, school, county and state education taxes. Two homes with similar market values can therefore produce different annual bills in different communities.
Before buying, compare the current tax bill and assessed value for homes in the towns you are considering. Ask how recent or upcoming reassessments could affect the bill, then add insurance, heating, maintenance and other housing costs to the comparison.
Some homeowners may qualify for relief through New Hampshire’s Low and Moderate Income Homeowners Property Tax Relief program. Municipal exemptions or credits may also be available to eligible older adults, people with disabilities and veterans. Check the rules in the town where you plan to live.
Retiring with a business Check New Hampshire tax rules
A retiree who operates a business should also account for New Hampshire’s business taxes. For taxable periods beginning on or after Jan. 1, 2025, the Business Profits Tax filing threshold is more than $109,000 in gross business income; the tax rate is 7.5% on taxable business profits. The Business Enterprise Tax generally requires a filing when gross receipts exceed $298,000 or the enterprise value tax base exceeds its separate threshold. Its rate is 0.55% on that tax base, and the tax paid generally can be credited against Business Profits Tax liability. Filing thresholds and the taxes owed are different questions, so review the business’s circumstances with a tax professional.
What daily life in New Hampshire could cost
Taxes are only part of the retirement decision. Access to health care, transportation and family, along with housing and winter expenses, can matter as much as a lower tax bill.
Potential advantages include:
- Many communities offer a quieter setting and relatively low crime.
- Mountains, trails, lakes and seasonal outdoor activities are widely available, with the seacoast accessible by car.
- Health care options are available, although people in rural areas may have farther to travel.
- Parts of the state are within driving distance of Boston, Burlington, Vermont, and Portland, Maine.
Potential challenges include:
- Winters can be cold and snowy, adding to heating, maintenance and snow removal costs.
- Public transportation is limited outside larger population centers.
- Insurance premiums depend on the home, vehicle, coverage and location and should be priced before a move.
- Housing and other day-to-day costs may strain a fixed retirement budget.
- Living without a car can be difficult, particularly in rural communities.
Calculate the full cost before you move
Estimate your federal and state tax bills before and after a move, then compare property taxes, housing, insurance, transportation and health care costs for the specific town and home you have in mind. New Hampshire’s tax advantages may be substantial, but the decision rests on what remains in your budget and whether the community fits the retirement you want.
About the Author
Jim Guarino, CPA/PFS, CFP, MST is a managing director with Baker Newman Noyes in Woburn, MA and is a member of the American Institute of CPAs (AICPA) PFP Champions Task Force.